This year’s State of the CIO 2003 survey reveals a very different set of challenges confronting our readers and a new set of priorities for IT leaders. Even as companies continue to struggle with a sputtering economy and weak corporate performance, and CIOs continue to wrestle with budget cuts and scarce resources, the demands the enterprise places on IT have been ratcheted up. Today, CIOs are being asked to cut costs, increase productivity, and find new ways to generate revenue and profits. In this dollar-anxious environment, alignment between business and IT, between the CEO and CIO?always important?is more critical than ever.

What’s Changed

Last year, chief information officers told us that the biggest hurdles they needed to overcome were inadequate budgets and a lack of time for strategic thinking (see last year’s State of the CIO issue at www.cio.com/ state). CIOs reported that their energy went into staffing their departments, retaining employees and implementing new technologies, such as wireless.

This year, based on the responses of 539 heads of IT from a broad range of industries including manufacturing, government, health care, technology, education and finance, we can see that both staffing and new technologies have taken a backseat to finding best practices for partnering with business units and delivering the greatest value to the organization. While CIOs will continue to deal with tight budgets in 2003, their greatest challenges for the coming year are prioritizing demands from the various business units and aligning IT with business goals.

This year’s study also finds shifts in spending priorities. Security has moved from the bottom half of last year’s spending list to become the fourth highest IT spending priority for CIOs. Systems and process integration remains CIOs’ top spending priority as companies continue to try to squeeze efficiencies out of their operations.

In terms of the skills CIOs believe they need to succeed in their jobs, effective communication and understanding business processes and operations remain important. However, strategic thinking and planning, which was listed as a critical skill by less than half (46 percent) of the CIOs surveyed last year, rocketed up this year’s list with 76 percent of IT executives saying they considered that essential. Clearly, the pressure cooker of today’s corporate world has forced CIOs to redefine their roles and their jobs. It’s either that or get cooked. (See "The Importance of Being Strategic," Page 58.)

Another skill that more CIOs need to hone is financial-speak. The percentage of CIOs reporting to their CFOs doubled?from 11 percent last year to 22 percent.